Stocks Reversing Sharply Lower into Close on Rising US Election Credibility Concerns, US Policy-Induced Stagflation Fears, China Economy Worries, Tech/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.7 +1.4%
• DJIA Intraday % Swing .55% n/a
  
• Bloomberg Global Risk On/Risk Off Index 56.0 -1.7%

• Euro/Yen Carry Return Index 169.2 -.21%

• Emerging Markets Currency Volatility(VXY) 7.8 -.51%

• CBOE S&P 500 Implied Correlation Index 20.7 +2.8% 

• ISE Sentiment Index 133.0 -3.0
  

• Total Put/Call .82 -8.9%

• NYSE Arms 2.11 +189.0% 
• NYSE Non-Block Money Flow -$268.6M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 57.6 +1.1%
  

• US Energy High-Yield OAS 335.5 -.5%
• Bloomberg TRACE # Distressed Bonds Traded 345 -12
  

• European Financial Sector CDS Index 68.9 +1.6% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 210.44 -.52%
  

• Italian/German 10Y Yld Spread 162.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 89.7 -.6%
  

• Emerging Market CDS Index 167.6 -1.5%
• Israel Sovereign CDS 108.6 +.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.0 +.08%

• 2-Year SOFR Swap Spread -19.75 basis points -.5 basis point
  

• TED Spread 24.75 basis points -3.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.5 +1.75 basis points
  
• MBS  5/10 Treasury Spread 145.0 +2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 963.0 -1.0 basis point
  
• Avg. Auto ABS OAS 80.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.73 -.17%
• 3-Month T-Bill Yield 5.39% +2.0 basis points
  

• China Iron Ore Spot 134.4 USD/Metric Tonne +.37%
• Dutch TTF Nat Gas(European benchmark) 33.50 euros/megawatt-hour +2.9%

• Citi US Economic Surprise Index 21.4 +3.3 points

• Citi Eurozone Economic Surprise Index -43.3 +2.2 points

• Citi Emerging Markets Economic Surprise Index 19.0 -.2 point
• S&P 500 Current Quarter EPS Growth Rate YoY(11 of 500 reporting) +11.7% +.8 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.60 -.01:  Growth Rate +11.4% unch., P/E 19.7 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.04% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +0.0% -0.0 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 287.67 +.15: Growth Rate +34.9% +.1 percentage point, P/E 30.7 +.3
  
• Bloomberg US Financial Conditions Index .67 -1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .40 -2.0 basis points
  
• US Yield Curve -50.0 basis points (2s/10s) +1.5 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +2.68% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 64.1% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.43% unch.: CPI YoY +3.33% unch.
  
• 10-Year TIPS Spread 2.20 unch.
  
• Highest target rate probability for March 20th FOMC meeting: 71.6%(+3.2 percentage points) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 67.3%(+6.7 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -405 open in Japan 
• China A50 Futures: Indicating -63 open in China

• DAX Futures: Indicating +90 open in Germany

Portfolio:

• Lower:  On losses in my consumer discretionary/tech/industrial/transport/utility sector longs
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value -.2%
  

Sector Underperformers:

• 1) Gambling -1.2% 2) Biotech -.9% 3) Insurance -.7%

Stocks Falling on Unusual Volume: 

• AFRM, LNTH, GCT, UTHR, AON, IMVT, FDX, FLNC and ARGX
  

Stocks With Unusual Put Option Activity:

• 1) FDX 2) INDA 3) ALGM 4) GIS 5) FND
  

Stocks With Most Negative News Mentions:

• 1) FDX 2) BLUE 3) LICY 4) GH 5) FSR
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +1.1%
  

Sector Outperformers:

• 1) Oil Service +1.3% 2) Airlines +1.3% 3) Shipping +1.1%

Stocks Rising on Unusual Volume:

• LQDA, SCS, MGNX, TTC, CLSK, RUSHA, BVN, MARA, ODD, ZIMV, ZIM, HUT, SGML, SPH, DFH, ENS, EPAC, RIOT, OPRA, NMRK, COIN, SRAD, SEMR, RKT, HLX, MLKN and GOOG
  

Stocks With Unusual Call Option Activity:

• 1) EWW 2) FDX 3) LQDA 4) EFA 5) CAN

Stocks With Most Positive News Mentions:

• 1) LQDA 2) CCO 3) MGNX 4) SCS 5) MARA
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (APOG)/1.10
• (KMX)/.43
• (CCL)/-.13
• (CTAS)/3.49
• (PAYX)/1.07
  

After the Close: 

• (AIR)/.80
• (AVO)/.10
• (NKE)/.84
  

Economic Releases

8:30 am EST

• 3Q GDP revisions.
• Initial Jobless Claims for last week are estimated to rise to 215K versus 202K the prior week. 
• Continuing Claims are estimated to rise to 1880K versus 1876K prior.
• The Philly Fed Business Outlook Index for Dec. is estimated to rise to -3.0 versus -5.9 in Nov.
  

10:00 am EST

• The Leading Index for Nov. is estimated to fall -.5% versus a -.8% decline in Oct.
  

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for Dec. is estimated to fall to -4.0 versus -2.0 in Nov.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Japan CPI report, the Fed's balance sheet report and the weekly EIA natural gas inventory report could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -4.2% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.1 +1.0
  
• 5 Sectors Declining, 6 Sectors Rising
• 61.2% of Issues Advancing, 33.4% Declining 
• TRIN/Arms 1.74 +138.3% 
• Non-Block Money Flow -$79.9M
  
• 271 New 52-Week Highs, 22 New Lows
• 65.5%(+1.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 76.0 +1.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 56.4 -1.2%
• Bloomberg Cyclicals/Defensives Pair Index 142.1 +.32%
  
• Russell 1000: Growth/Value 18,490.5 +.79%
  
• 1-Day Vix 7.6 -13.0%
  
• Vix 12.3 -1.2%
  
• Total Put/Call .77 -14.4%

Wednesday Watch

X:

• @KanekoaTheGreat - BREAKING: The Colorado Supreme Court removed Donald Trump from the 2024 ballot. They are rigging the 2024 election. These are the actions of a banana republic.
• @rawsalerts - #BREAKING: Humans may be fueling global warming by breathing according to studies. - NYP. 
• @TonyClimate - China is having record cold weather. Without their huge increase in coal usage over the past decade, a lot of people would be freezing to death. 
• @WallStreetSilv - This is all purpose flour from Walmart. 51.8% Inflation in less than 2 years, in one of humankind's most basic of necessities. 
• @VigilantFox - @Timcast: "Would you vote for Trump if he chose Nikki as VP?" @TuckerCarlson: "I would not only not vote for that ticket, I would advocate against it as strongly as could. Here's someone who's actively opposed to the interests of the country I grew up in ... [and] is a creature of the oligarch." (video)
  
• @stclairashley - Can @Delta please let all of their customers know what medical screenings are being done for these migrants illegally crossing our border from all over the world and being flown on their flights?
• @visegrad24 - Harvard Law Professor Mark Ramseyer speaks up about the ideological cages built at Harvard: “Harvard is a vastly less tolerant place than it was when I arrived in 1998. The intolerance is a function of an increasingly large fraction of our colleagues. And we – the rest of us on the Harvard faculty – let it happen. The cancelling, the punishments, the DEI bureaucracy, the DEI statements, the endless list that we could all recite – all this happened on our watch. 
• @acemaxx - Global financial conditions, chart @ReutersBiz. (graph)
• @matttttt187 - 𝐈𝐥𝐥𝐞𝐠𝐚𝐥 𝐢𝐦𝐦𝐢𝐠𝐫𝐚𝐧𝐭 𝐜𝐚𝐫𝐚𝐯𝐚𝐧𝐬 𝐡𝐞𝐚𝐝𝐢𝐧𝐠 𝐬𝐭𝐫𝐚𝐢𝐠𝐡𝐭 𝐢𝐧𝐭𝐨 𝐔𝐒 𝐅𝐫𝐨𝐦 𝐋𝐮𝐤𝐞𝐯𝐢𝐥𝐥𝐞 𝐀𝐫𝐢𝐳𝐨𝐧𝐚. 𝐓𝐡𝐞𝐫𝐞 𝐢𝐬 𝐧𝐨 𝐦𝐢𝐥𝐢𝐭𝐚𝐫𝐲 𝐨𝐫 𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐠𝐮𝐚𝐫𝐝 𝐭𝐨 𝐬𝐭𝐨𝐩 𝐭𝐡𝐞𝐦. (video) 𝐎𝐯𝐞𝐫 +𝟐,𝟎𝟎𝟎 𝐦𝐢𝐠𝐫𝐚𝐧𝐭𝐬 𝐚𝐫𝐞 𝐚𝐰𝐚𝐢𝐭𝐢𝐧𝐠 𝐭𝐨 𝐛𝐞 𝐩𝐫𝐨𝐜𝐞𝐬𝐬𝐞𝐝 𝐢𝐧 𝐄𝐚𝐠𝐥𝐞 𝐏𝐚𝐬𝐬 𝐚𝐬 𝐦𝐚𝐬𝐬𝐢𝐯𝐞 𝐠𝐫𝐨𝐮𝐩𝐬 𝐨𝐟 𝐦𝐢𝐠𝐫𝐚𝐧𝐭𝐬 𝐜𝐨𝐧𝐭𝐢𝐧𝐮𝐞 𝐭𝐨 𝐜𝐫𝐨𝐬𝐬 𝐢𝐥𝐥𝐞𝐠𝐚𝐥𝐥𝐲 𝐡𝐞𝐫𝐞. 𝐅𝐞𝐝𝐞𝐫𝐚𝐥 𝐨𝐟𝐟𝐢𝐜𝐢𝐚𝐥𝐬 𝐚𝐫𝐞 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐥𝐲 𝐨𝐯𝐞𝐫𝐰𝐡𝐞𝐥𝐦𝐞𝐝 𝐛𝐲 𝐭𝐡𝐞 𝐦𝐢𝐠𝐫𝐚𝐧𝐭 𝐬𝐮𝐫𝐠𝐞 𝐭𝐡𝐚𝐭 𝐢𝐬 𝐧𝐨𝐧-𝐬𝐭𝐨𝐩 𝐡𝐞𝐫𝐞. (video) 
• @PIQSuite - The U.S. state of Tennessee has sued BlackRock alleging the world's largest asset manager breached consumer protection laws by making "misleading" statements about its environmental, social and corporate governance (ESG) investment strategies.
• @Xx17965797N - They literally covered up the “APEEL” with Organic sticker! (video)
• @stillgray - They’re destroying all remnants of the past and replacing them with hideous monstrosities. The Pennsylvania flag is next up on the list because it looks “colonialist.” Check out the proposed replacement on the right. (pic)
• @C_Barraud - Hedge Funds Sour on Crude #Oil With Least Bullish Positions on Record – Bloomberg. (graph)
• @zerohedge - US Military Faces 'Mutiny' Of Enlisted Gen-Zers As TikTok Virus Spreads.
• @DeItaone - Second Hand Rolex Watch Prices Index Hit Lowest Since April 2021. (graph)

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 997,917 Reports(+9,212 from prior week) Through November 3rd, 2023.

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 90.0 -1.5 basis points.

• China Sovereign CDS 58.5 +.75 basis point.
  
• China Iron Ore Spot 134.1 USD/Metric Tonne +1.4%.

• Bloomberg Emerging Markets Currency Index 41.8 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 57.5 +.8%.
  
• Bloomberg US Financial Conditions Index .67 -1.0 basis point.
  
• Volatility Index(VIX) futures 14.8 -.6%.
• Euro Stoxx 50 futures +.04%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures +.04%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.